Many Companies Use Accelerated Depreciation for

question 111

Multiple Choice

Many companies use accelerated depreciation for

• A)financial reporting purposes and a different method for tax purposes.
• B)financial reporting purposes because depreciation is not allowed for tax purposes.
• C)tax purposes because it results in a larger net income in the early years of a plant asset's life.
• D)tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes.

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Definitions:

Maturity Value

The amount that will be received at the maturity date of an investment, including the principal and any accrued interest.

Future Value

The value of an asset or cash at a specified date in the future calculated based on assumed rate of growth or interest.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods.

Future Value

The value of an investment at a specific future date, accounting for interest or returns earned over time.